A new Bitcoin exchange called MultiSigna, been built entirely using multi-signature technology, hope to empower its users to buy and sell cryptocurrency without having to trust a third party to hold their coins.
Why ‘Traditional’ Bitcoin Exchanges are Bad
Exchanges have been responsible for some of the worst Bitcoin news stories of the past year, and it would be easy to argue that they are still the weakest link in the overall ecosystem of Bitcoin services. Several major websites allowing people to buy and sell BTC and other coins have been targeted by hackers and thieves. Whether its hackers targeting Bitstamp or the infamous Mt. Gox Bitcoin theft, many thousands of people have lost coins after trusting them to one of these websites.
Of course the standard advice is not to leave your coins on an exchange – to immediately withdraw them to a wallet. But there are may situations in which this is not practical, for example if you are a trader who buys and sells regularly, or if you want place an offer above or below the current market price and wait to see if it gets fulfilled.
The Multi-Signature Alternative
The alternative which MultiSigna have developed relies on MultiSignature technology. Put simply, this means that multiple people must agree that a transaction is ok before it is processed – in this case the buyer the seller and MultiSigna.
When you create an account with MultiSigna they create a wallet for you which requires these multiple signatures in order to make any payments. This means that if the buyer and seller agree and everyone is happy the transaction will proceed and coins will be sent. If the buyer and seller do not agree then the third signature from MultiSigna will be required to decide who gets the coins. In other words – MultiSigna provide a kind of escrow service where they arbitrate on any disagreements, but they are never in possession of the coins themselves – they can only choose to send them to the buyer or to the seller and cannot do anything else with them.
For the moment two currencies are supported for buying and selling coins – United States dollars and Euros.
To celebrate their launch and encourage adoption MultiSigna are offering a 0.05 btc reward for the first 200 completed transactions.
Image Credit: MultiSigna screenshot.